Meetings of Board (Section 173 of the Companies Act, 2013) :
Section 173 of the Companies Act, 2013 came into force from 1st April, 2014 which provides for Meetings of Board. According to this section:
(i) Frequency of Board Meetings [Section 173 (1)]:
(a) First Board meeting: Every company shall hold the first meeting of the Board of Directors within 30 days of the date of its Incorporation.
(b) Subsequent Board meetings: Every company shall hold minimum of 4 meetings every year provided that the gap between two consecutive board meetings shall not be more than 120 days.
However, the Central Government may by notification, direct that these provisions will not apply in relation to any class or descriptions of companies or will apply in relation thereto subject to such exceptions, modifications or conditions as may be specified in the notification.
Vide Notification G.S.R. 466(E) dated 5th June 2015, this sub-section 1 of section 173 shall apply to the company formed under section 8 of the Companies Act, 2013 only to the extent that the Board of Directors, of such companies shall hold at least one meeting within every six calendar months.
(ii) Participation in Board meeting [Section 173 (2)]:
(a) Sub section (2) of section 173 allows directors to attend Board meetings,
(1) in person, or,
(2) through video conferencing, or,
(3) other audio visual means as may be prescribed.
(b) Such audio visual means should be capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meetings along with date and time.
(c) However, the Central Government may by notification specify such matters as given under Rule 4 of the Companies (Meetings of Board and its powers) Rules, 2014 which shall not be dealt with in a meeting through video conferencing and other audio visual means.
“Video conferencing or other audio visual means” means audio -visual electronic communication facility employed which enables all the persons participating in a meeting to communicate concurrently with each other without an intermediary and to participate effectively in the meeting.
(d) Some of the key points related to meetings of Board that are held through conferencing or other audio visual means, as provided in Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014 are as under:
(1) Every Company shall make necessary arrangements to avoid failure of video or audio visual connection.
(2) The Chairperson of the meeting and the company secretary, if any, shall take due and reasonable care-
(A) to safeguard the integrity of the meeting by ensuring sufficient security and identification procedures;
(B) to ensure availability of proper video conferencing or other audio visual equipment or facilities for providing transmission of the communications for effective participation of the directors and other authorised participants at the Board meeting;
(C) to record proceedings and prepare the minutes of the meeting;
(D) to store for safekeeping and marking the tape recording(s) or other electronic recording mechanism as part of the records of the company at least before the time of completion of audit of that particular year.
(E) to ensure that no person other than the concerned director are attending or have access to the proceedings of the meeting through video conferencing mode or other audio visual means;
(F) to ensure that participants attending the meeting through audio visual means are able to hear and see the other participants clearly during the course of the meeting.
However, the differently abled persons may make a request to the Board to allow a person to accompany him.
(3) (A) The notices of the meeting shall be sent to all the directors in accordance with the provisions of Section 173 (3) of the Act;
(B) The notice of the meeting shall inform the directors regarding the options available to them to participate through video conferencing mode or other audio visual means, alongwith all other information to enable the directors to participate through such mode;
(C) A director intending to participate through video conferencing mode or other audio visual means shall communicate his intention to the chairman or the company secretary of the company.
(D) If a director intends to participate through video conferencing or other audio visual means, he shall give prior intimation to that effect, to enable the company to make arrangements in this behalf.
(E) The director, who desires, to participate may intimate his intention of participation through the electronic mode at the beginning of the calendar year and such declaration shall be valid for one calendar year.
(F) In the absence of any such intimation from the director, it shall be assumed that he will attend the meeting in person.
(4) Process of a roll call at the Board Meeting: A director participating in a meeting through video conferencing or other audio visual means shall be counted for the purpose of quorum, unless he is to be excluded for any items of business under any provisions of the Act or the rules.
(5) The scheduled venue of the meeting as mentioned in the notice convening the meeting, shall be deemed to be the venue of the meeting which is conducted through video conferencing or other audio visual means authorized under these rules and all recordings at such meeting shall be deemed to have been made at that place.
(6) The draft minutes of the meeting shall be circulated among all the directors within 15 days of the meeting either in writing or in electronic mode as may be decided by the Board.
Matters not to be dealt with in a meeting through video conferencing or other audio visual means as provided in Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 are as under:
(1) the approval of the annual financial statements;
(2) the approval of the Board‘s report;
(3) the approval of the prospectus;
(4) the Audit Committee Meetings for consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under sub-section (1) of section 134 of the Act; and
(5) the approval of the matter relating to amalgamation, merger, demerger acquisition and takeover.
(iii) Notice of the Board meeting [Section 173 (3)]:
(a) According to section 173(3), every board meeting shall be called by giving at least 7 days notice in writing to all the directors at their registered address (whether in India or outside India). The notice may be sent by hand delivery or by post or by electronic means.
(b) Provided that a meeting of the Board of Directors may be called on a shorter notice (than 7 days) in order to transact an urgent business, subject to the condition that at least one independent director, if any, shall be present at the meeting. If no independent director is present at such a meeting of the Board then the decisions taken at such a meeting shall be circulated to all the directors and shall be final only on ratification thereof by at least one independent director, if any.
(c) The Companies (Meetings of Board and its Powers) Rules, 2014 further provides that the notice of the meeting shall inform the directors regarding the option available to them to participate through video conferencing mode or other audio visual means, and shall provide all the necessary information to enable the directors to participate through video conferencing mode or other audio visual means.
(d) On receiving such a notice, a director intending to participate through video conferencing or audio visual means shall communicate his intention to the Chairperson or the company secretary of the company. He shall give prior intimation to that effect sufficiently in advance so that the company is able to make suitable arrangements in this behalf.
(e) If the director does not give any intimation of his intention to participate that he wants to participate through the electronic mode, it shall be assumed that the director shall attend the meeting in person.
(iv) Penalty for failure to give notice: The Act under section 173(4) has prescribed a penalty of ` 25,000 on every officer of the Company whose duty is to give notice under this section and who has failed to do so.
(v) Exceptions [Section 173(5)]:
(a) A One Person Company, small company and dormant company shall be deemed to have complied with the provisions of section 173 if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than 90 days.
(b) Provided that, a One Person Company in which there is only one director on its Board of Directors shall not be required to hold at least one Board meeting in each half of a calendar year. Thus, it is exempt from following the provisions of section 173(5).
For further details related to “Meetings of Board through video conferencing or other audio visual means”, refer the Companies (Meetings of Board and its Powers) Rules, 2014.